week 2 discuuions

UnderstandingEthicalConsumers.pdf

Home >Business & Finance homework help >Management homework help >week 2 discuuions

Understanding ethical consumers: willingness- to-pay by moral cause

Kendall Cox Park Department of Sociology, Princeton University, Princeton, New Jersey, USA

Abstract Purpose – Moral issues such as environmental degradation and workers’ rights are no longer relegated to the political realm; today, they permeate the marketing of consumer products. Some consumer studies focus on organics, others on green goods and still others on fair trade products, but none include the full range of ethical consumption. This study, aims to investigate consumer willingness to pay for five distinct ethical narratives. Design/methodology/approach – Using original data from a national sample, this paper parses out five types of ethical narratives: fair trade, sustainable/green, American-made and two types of charitable partnerships. Using random assignment and an experimental design allows in isolating the effects of gender, age, education, income, political orientation and political involvement on how much consumers are willing to pay for each type of ethical product. Findings – This survey experiment demonstrates that the fair trade narrative is the most valuable to consumers, followed by the charitable narratives. The two charitable narratives are universally appealing, whereas fair trade, green and American-made products appeal to three distinct groups of consumers. This paper demonstrates that there is not one sort of ethical shopper, but many. Practical/implications – This study examines what sorts of stories appeal to particular demographics. It will help socially and environmentally responsible companies better understand their target demographic and how to motivate their target audience. Originality/value – Previous research yields conflicting findings about who values ethical products because each study focuses on a different form of ethical consumption. This study uses original data to investigate consumers’ valuations of five different types of ethical narratives. The results help in making sense of divergent findings in the literature and expand understanding of socially conscious shoppers.

Keywords Experimental design, Social responsibility, Sustainable consumption, Quantitative methods, Behavioral sciences, Cause-related marketing

Paper type Research paper

Introduction

The popularity of fair-trade foods, eco-friendly products and buy-one-give-one (BOGO) apparel indicates that people are willing to spend more for a good cause (Anderson and Hansen, 2004; Kimeldorf et al., 2006; Hudson et al., 2013). This study investigates economic behavior with social implications, where social justice and environmentalism impart value to consumer goods. I report the results of a survey experiment demonstrating that people are willing to pay more for a cause. But the relationship between individual characteristics and willingness to pay is anything but straightforward. Previous research yields conflicting findings about who values ethical products because each study focuses on a different market niche (Hudson et al., 2013; Taylor and Boasson 2014; Elliott, 2013; Ross et al., 1992; Moosmayer and Fuljahn 2010; Pedrini and Ferri 2014; Youn and Kim 2008). While these studies have narrowly focused on a single type of

ethical consumption, I parse out fair trade, sustainable/green, American-made and two types of charitable narratives to show that ethical consumption is not a single phenomenon. Fair

trade products ensure that producers are paid a living wage. Green products are made sustainably to prevent environmental damage. Products that are made in the USA keep business in the country and combat some of the problems of globalization. Some ethical goods donate their profits to charity. Still others follow a BOGO model, where they donate an item for every product sold. In this study, I ask which narratives encourage people to buy ethically. And do different people respond to different stories? In the following sections, I discuss several fields of

research that apply to my analysis. I first review studies of fair trade, green goods, American-made products and charitable partnerships. Then, I present hypotheses about who values which ethical narratives. First, I expect that the price people are willing to pay for a product will differ depending on the narrative (H1). I also expect that women will respond more strongly to ethical narratives than men (H2) and that Democrats (political liberals) will value ethical goods more than Republicans (political conservatives; H3). Finally, we might imagine that certain types of people value ethical goods more highly: younger (H4), more highly educated (H5), wealthier (H6) and more politically and civically engaged (H7-8).

The current issue and full text archive of this journal is available on Emerald Insight at: www.emeraldinsight.com/0736-3761.htm

Journal of Consumer Marketing 35/2 (2018) 157–168 © Emerald Publishing Limited [ISSN 0736-3761] [DOI 10.1108/JCM-02-2017-2103]

Received 17 February 2017 Revised 5 May 2017 24 July 2017 Accepted 11 August 2017

157

http://dx.doi.org/10.1108/JCM-02-2017-2103

This study answers these questions experimentally by quantifying the values of different ethical narratives. I collect and analyze original data from a national sample of individuals in the USA. Subjects were randomized into one of six experimental conditions and asked to report what they would pay for a particular product. The actual physical product, a pair of socks, remains the same in all conditions, but the framing or narrative associated with the socks varies. By experimentally manipulating the narrative and holding constant confounding factors, such as the appearance and quality of the socks, we can explicitly compare people’s valuations of different ethical narratives. There are real differences in what people are willing to pay for different kinds of products. Some narratives appealed primarily to particular groups, while others were universally popular. For example, charity narratives seem to appeal to everyone, whereas only certain sorts of people respond to green/ sustainable narratives. This study helps us better understand how different demographic groups respond to different responsibility and sustainability narratives. As a result, it can help marketers tailor their messaging to their target customers.

Literature review

The idea that morals influence the marketplace is not new. Fourcade and Healy suggest that markets are “explicitly moral projects, saturated with normativity” (Fourcade and Healy, 2007, pp. 299-300). Others, like Zelizer (2010) and Quinn (2008), illustrate how shifts in religious and cultural beliefs accompany changes in people’s moral evaluations of market goods, such as life insurance. Beckert (2011) highlights the social and cultural nature of prices, demonstrating that networks, political forces and cultural frames all influence our perception of value. Beckert gives the example of ethical goods, products whose values are based on more than their material qualities and are instead rooted in ethical evaluations. Others such as Sassatelli (2006), Thompson and Coskuner-Balli (2007), Shamir (2008) and Maniates (2001) argue that some consumers try to make the world a better place while they shop. Studies of ethical consumption show how moral and ethical issues (such as environmental issues and workers’ rights) that were once relegated to the political realm now permeate the marketing of consumer products. Ethical consumption comprises a range of practices and

products. As a result, the literature is inconsistent in its findings. Some studies look at green products, others at fair trade and still others at charitable products, and each study produces slightly different results. This is because ethical consumption is not a single practice. Green shoppers are not the same as those who buy fair trade (Elliott, 2013). Moral causes – and the stories that convey them – impart value onto otherwise everyday consumer objects, but the value of a product also depends on characteristics of its consumer. The remainder of this section reviews research on the wide range of ethical products: goods that are fair trade (made under good working conditions), sustainable/green, made in the USA, BOGO (such as Tom’s Shoes and Warby Parker glasses) or that offer charitable donations.

Fair trade Many studies focus on fair trade, which are goods produced by workers who are paid a fair wage. In this case, the utility function of the consumer encompasses the wellbeing of others. In a controlled behavioral experiment, Rode et al. (2008) tested whether and under what conditions subjects will pay a premium for fair-trade products. When there was no explanation for price differentiation, shoppers chose the cheapest product. When a higher price was explained by the producers’ compliance with child labor regulations, shoppers were more likely to make the ethical choice despite a higher price. One major issue with this study is its reliance on undergraduate subjects, most of whom studied economics, business and political science. Would these same findings hold up among a more representative sample? Field studies improve our understanding of how people

actually shop in the real world. In one field experiment, Kimeldorf et al. (2006) set up displays of two identical sock packages in a popular department store; the socks were indistinguishable, except that one was marked “Buy GWC [. . .] Good Working Conditions” and had an explanation that the socks were produced in a safe environment without child labor. Although the products were identical, one third of shoppers chose GWC socks over the standard pair when there was a 10 per cent markup. Even with a 40 per cent markup, the GWC socks made up one fourth of total sales. However, field experiments such as this one suffer from major limitations. Although they offer a more realistic setting than laboratory experiments or surveys, their sites are far from representative of the range of US shopping venues. The Kimeldorf et al. (2006) experiment took place in a single department store. This design makes it difficult to assess the effects of individual differences on the response to fair trade goods owing to their selection into the experimental setting. What these studies do show us is that purchasing ethical

goods depends on both the cause and the cost, but what about forces outside of the product itself, such as the shopper’s social status? An experiment by Hudson et al. (2013) teases out the effects of status display and information provision on the purchase of fair trade versus conventional coffee. They argue that if ethical consumption is a form of identity construction or status enhancement, the presence of an audience will increase one’s likelihood of purchasing fair trade products. If consuming ethically is a source of personal satisfaction or altruism, increased information about fair trade should increase the likelihood of a fair trade purchase. Although 60 per cent of their experiment subjects chose fair trade over conventional coffee, neither an audience nor increased information affected their subjects’ odds of choosing fair trade. Conversely, being female, previous knowledge of fair trade, liberal political ideology and awareness of political issues increase the probability of choosing fair trade. Thus, they conclude that demographics, political ideology and consumer knowledge have an impact on one’s preference for fair trade. Status display and increased information did not motivate consumers to shop ethically. These results may not be universal, though, as the study relied solely on college students (Hudson et al., 2013). While Hudson et al. (2013) report that women are more

likely to choose fair trade, Pedrini and Ferri found no evidence of a gender difference in what they call “responsible

Understanding ethical consumers

Kendall Cox Park

Journal of Consumer Marketing

Volume 35 · Number 2 · 2018 · 157–168

158

consumption”, measured by self-reported “commitment to gather the information necessary to evaluate the social and environmental content of [. . .] consumption” and “awareness on the possibility to exercise the power of legitimacy or sanction” through their purchase (Pedrini and Ferri, 2014, p. 129). They find that the most responsible consumers are older, well-educated and wealthy. Pedrini and Ferri (2014) employ a large-scale telephone survey of over 5,000 Italians, but there are no comparison studies in the USA. Taylor and Boasson (2014) seek to reconcile conflicting

findings about the demographic profile of ethical shoppers by disaggregating awareness, past purchases and willingness-to- pay. They find that more liberal, younger, female and highly educated consumers are the most willing to pay for fair trade. More liberal, female, highly educated and wealthier respondents are the most likely to be aware of fair trade and to have bought fair-trade in the past. Although this is a step toward making sense of conflicts within the literature, these findings are specific to fair trade, so they cannot speak to sustainable products or other sorts of altruistic goods.

Green goods With Green products, consumers pay extra for a public good, such as a clean environment. In a field experiment, Anderson and Hansen (2004) displayed two virtually identical plywood products side-by-side in Home Depot stores in Oregon; the only visible difference between the products was an ecolabel and an explanation of the environmental certification on one bin of plywood. They found that the eco plywood sold twice as quickly when the two products were priced the same, and eco plywood made up 67 per cent of all plywood sold. With a 2 per cent price premium, though, eco plywood sold much more slowly and made up only 37 per cent of all plywood sold. Like the Kimeldorf et al. (2006) sock experiment, this study cannot be generalized to the population at large. The field sites are hardly representative: Anderson and Hansen (2004) conducted their experiment in two Home Depots in Oregon, and their results differed significantly between the two locations. These findings might be specific to each shop’s unique pool of shoppers. Pedrini and Ferri (2014) find no evidence of a gender

difference in shoppers’ preference for environmental products. Instead, they report that income, education and age are all positively associated with responsible consumption. According to Elliott (2013), though, income is not a predictor of valuing green goods. Instead, education, being a female and identifying as an environmentalist increase one’s affinity for green consumer goods (Elliott, 2013). Although Elliott also used a mid-sized (N = 1,000) survey, her dependent variable, valuing green goods, is based solely on a dichotomous survey item:

Some companies make products that say they help the environment because they’re made using recycled materials, don’t use chemicals or will decompose naturally after being used. Do you personally try to buy these products, or not?” (Elliott, 2013, p. 302).

In reality, this tells us very little about how much these products are worth to respondents or whether they would purchase these items at a premium.

Made in the USA Despite the popularity of “Small Business Saturdays” and a pushback against outsourcing, few have investigated “Buy

American” consumption practices. These include patronizing small businesses, supporting clothing lines manufactured in the USA and more. Some investigate conscious consumers’ preference for local produce, but there are limited studies addressing the “Made in the USA” consumer movement (McEachern et al., 2010; Jekanowski et al., 2000; Zepeda and Li, 2006; Zepeda and Nie, 2012). Although different than the green and fair trade movements, this type of shopping falls under the umbrella of ethical consumption, because it is yet another way for consumers to enact social change through the market. The sample in this study was limited to American residents to test the power of a patriotic, anti-globalization narrative.

Buy-one-give-one On the other end of the spectrum is the more globally oriented buy-one-give-one model. The buy-one-give-one model is “widely embraced (and criticized) by consumers and businesses alike as an effective model for creating both commercial and social value” (Marquis and Park, 2014, p. 28). This model was pioneered by Blake Myocoskie of TOMS Shoes, a company that donates a pair of shoes to a child in need for every pair sold. The success of TOMS prompted other businesses to adopt the model, where an item is donated for every product sold. Today, products such as Warby Parker eyeglasses, Soapbox Soaps and 2 Degrees Foods sell products that purport to tackle global issues from poor vision to hygiene to childhood hunger. Although these products are popular, the buy-one-give-one model has received little scholarly attention.

Charitable partnerships: donate. The social impact [of buy-one-give-one products] is clearer, easier to understand, and more personal than that of a traditional cause marketing company, such as Product Red, that donates a percentage of sales (Marquis and Park, 2014, p. 30).

Nonetheless, cause marketing remains popular among consumers. Partnerships between companies and charities have also been called “cause tie-ins” and “cause–brand partnerships” (Rozensher, 2013, p. 181). Examples include Product Red and General Mills’ Boxtops for Education. Typically, cause marketing involves a company donating a portion of the profits from to an affiliated charity. Eighty five per cent of consumers “have a more positive image of a product or company when it supports a cause they care about” (Echo Communications, 2010, p. 5). The most popular causes among consumers are economic development and education, followed closely by health and clean water. Many studies have found women to hold more favorable attitudes toward cause marketing than men (Ross et al., 1992; Moosmayer and Fuljahn 2010). Youn and Kim (2008) find no evidence of a gender effect but report that religious beliefs, social networks, a sense of social responsibility, civic engagement and previous charitable contributions have a positive relationship with preference for cause-related marketing. It is no surprise that when price and quality are equal 94

per cent of consumers prefer a brand associated with a good cause (Cone/Echo, 2011). Meanwhile, only 19 per cent are willing to switch to a more expensive brand associated with a cause (Echo Communications, 2010). Thus, it is clear that people have a preference for these charitable products. But how

Understanding ethical consumers

Kendall Cox Park

Journal of Consumer Marketing

Volume 35 · Number 2 · 2018 · 157–168

159

much more are they willing to pay? That question remains to be answered.

Hypotheses

An overview of the literature exposes the diversity among ethical consumption. Social responsibility is not a single phenomenon but rather a collection of products and stories. Just as there are a variety of types of narratives, there are different sort of shoppers (Elliott, 2013). Some consumers will prefer efficient hybrid cars, others green household products and still others local food. Some goods, such as the Prius, allow for status display. Others, such as recycled paper towels, allow for little social payoff; they are privately used and disposed, unlikely to be noticed by others. This study measures a consumer good that, such as paper towels, is rarely noticed by others or used as a status symbol: athletic socks. To date, no single study has explored the full range of ethical

consumption. This study is the first step toward a more comprehensive view of ethical consumption, one that fleshes out several types of ethical stories. This survey experiment seeks to measure three things. Who values ethical goods? What kinds of ethical goods do they value? And finally, how much do they value the causes or narratives attached to these goods? My first hypothesis follows from a literature demonstrating

that people are willing to pay more for a cause. What remains to be studied is how different sorts of ethical consumption compare to one another. This hypothesis has two parts; the first is rooted in the literature, whereas the second is more exploratory, based on Cone’s Communications (2010) finding that people value economic development and health more highly than other charitable partnerships:

H1a. Respondents will be willing to pay more for all narratives than for the control.

H1b. Narratives involving human livelihood, such as Fair Trade, Donate and BOGO will be worth more than Green or USA.

Some evidence suggests that green and fair trade products appeal to women more than they do to men (Hudson et al., 2013; Taylor and Boasson, 2014; Elliott, 2013; Ross et al., 1992; Moosmayer and Fuljahn 2010). There has been little research on gendered preferences for American-made, charitable or BOGO products, but we might expect to find a gender difference for these as well.

H2. Women will value all ethical narratives more than men.

Political ideology is associated with a preference for fair trade goods (Hudson, Hudson and Edgerton, 2013; Taylor and Boasson, 2014), so I expect that being a Democrat will be positively associated with price for all ethical narratives.

H3. Democrats will be willing to spend more on ethical goods than Republicans.

The evidence is mixed as to whether age affects people’s preferences for ethical goods (Pedrini and Ferri, 2014; Taylor and Boasson, 2014), but certain goods, such as BOGO products, are marketed toward a younger audience. The same

is true of education and income; past research yields mixed results (Pedrini and Ferri, 2014, Taylor and Boasson, 2014; Elliott, 2013). It stands to reason, though, that those with more disposable income will be willing to spend more for a cause. It also seems logical that those with higher education will be better informed and more likely to be aware of environmental degradation, unfair working conditions and other moral issues addressed by ethical consumption.

H4. Younger people will value ethical goods more highly, especially Fair Trade, Green and BOGO narratives.

H5. More highly educated people will be willing to pay more for ethical goods.

H6. Wealthier people will be willing to pay more for ethical goods.

Finally, lifestyle factors impact one’s willingness to pay for ethical products (Hudson et al., 2013). Those engaged in political activism are likely to spend more on products associated with labor and the environment. Those involved with charities will be more drawn to products with a charitable bent.

H7. Activists – those who protest, petition, boycott, vote and contribute to political campaigns – will pay more for ethical goods, particularly Fair Trade and Green narratives.

H8. Those who donate and volunteer to charities will pay more for Donate and BOGO narratives.

Methods

Data To test these hypotheses, I recruited over 2,109 subjects through Amazon’s Mechanical Turk and directed them to a survey experiment. Mechanical Turk is an online labor market where workers, or “Turkers”, can choose among computer- based jobs posted by “requesters”. Studies conducted on Mechanical Turk have high test–retest reliability, and high internal consistency (Paolacci et al., 2010; Mason & Suri 2012). Previous research shows that Mechanical Turkers behave similarly to traditional laboratory subjects (Horton et al., 2011; Paolacci et al., 2010; Paolacci et al., 2010; Mason and Suri 2012). Mechanical Turk is an ideal platform for hosting this experiment and provides greater diversity of age, education and income than a pool of undergraduate participants.

Design Although surveys cannot realistically simulate day-to-day shopping, they give us a sense of how much consumers value a particular good. Unlike traditional surveys, survey experiments such as this one ensure “that a given relationship involves cause and effect” (Mutz, 2011). In this survey experiment, subjects are randomly assigned into one of six treatments. Random assignment allows us to establish unbiased causal inferences about the effect of the independent variable, story narrative, on our dependent variable, price.

Understanding ethical consumers

Kendall Cox Park

Journal of Consumer Marketing

Volume 35 · Number 2 · 2018 · 157–168

160

Mechanical Turk workers who chose to participate in the study were directed to an online survey. After reading a consent form and agreeing to participate, all subjects were asked to imagine that they are shopping for a pair of socks. The survey displayed a photo of a pair of athletic socks alongside a brief narrative, and subjects were asked how much they would be willing to pay for that pair of socks[1]. The photo and intro were the same for everyone, but each subject was randomly assigned into one of six conditions, which corresponded to six different narratives (Table I). These narratives cover a range of ethical issues: working

conditions, environmental sustainability, globalization, children’s health and child poverty. Using a between-subjects design ensures that subjects are unaware of alternative framings and the purpose of the survey. The survey features a consumer object that is gender-neutral

and relatively homogenous, something that nearly everyone might need and that is not subject to fashion or individual taste: a basic pair of athletic socks. Socks are relatively undifferentiated, they look similar for both men and women, and there are virtually no “high-end” or designer athletic socks. People wear socks under clothing and shoes, so they are rarely objects of status display. Because the same photo of socks was used in all experimental conditions, I was able to isolate the effect of the story from any tangible qualities of the item. After a pilot study, it became clear that subjects were unsure

how much a basic pair of socks typically costs. Price estimates ranged anywhere from $1 to $20, and many wrote in the comments box that they had no idea how much socks should cost. Research shows that consumers are surprisingly bad at assigning accurate prices to consumer goods, although they are capable of recognizing a good or bad deal (Jensen and Grunert, 2014; Aalto-Setala and Raijas 2003; Monroe and Lee 1999; Vanhuele and Drèze, 2002). To account for this, the final survey provided an anchor price for all experimental conditions. All subjects were told the following:

Imagine you are shopping for a pair of athletic socks. You pass a rack of basic socks, which cost $4 a pair. Next, you see a pair of socks that look identical to the $4 pair, but the packaging indicates [. . .]

followed by the narrative. For the control narrative, subjects were simply told the following:

Imagine you are shopping for a pair of athletic socks. You pass a rack of basic socks, which cost $4 a pair. Next, you see a pair of socks that look identical to the $4 pair.

The $4 mark provides a reference point, one that consumers would have in a real-world shopping experience where they can compare prices across similar items. It also helps reduce variance so that differences in the outcome variable are a product of the treatment and respondent characteristics, not one’s knowledge (or lack, thereof) of price.

Predictors At the end of the experiment, I collected demographic information and indicators of political and civic engagement. Once the survey was complete, duplicate survey responses were discarded. Any repeat IP addresses were an indication that the same individual took the survey more than once, so I removed all but the first entry from each worker with a duplicate. One respondent reported a price of $37, nearly ten times higher than the average, so this respondent was dropped. Finally, all incomplete surveys were dropped from the data set. There were 26 of these problem responses, leaving us with 2,109 observations in total. Tables II, III and IV illustrate the demographic makeup of the sample. As for political and civic involvement, subjects selected

which activities they participated in during the previous four years. Previous studies have found these indicators to have a

Table I Treatment groups and narratives

Treatment group Narrative

Fair Trade The socks were made by a community enterprise that supports good working conditions for low-income women in Latin America. The proceeds of each sale go directly to those women

Green The socks were made sustainably out of recycled materials

USA The socks were manufactured in the United States Buy-one-give-one (BOGO)

For every pair sold, a pair of socks is given to a child in need

Donate The proceeds go toward providing healthcare to impoverished children

Control No narrative: Subjects are simply asked how much they will pay for a pair of athletic socks

Table II Level of education

Level of education Frequency (%)

No schooling completed 1 0.0 Nursery school to 8th grade 2 0.1 9th, 10th or 11th grade 7 0.3 12th grade, no diploma 17 0.8 High school diploma 190 9.1 Some college credit, but less than one year 208 10.0 One or more years of college, no degree 446 21.4 Associates degree (e.g. AA or AS) 190 9.1 Bachelor’s degree (e.g.: BA, AB, BS) 809 38.9 Master’s degree (e.g.: MA, MS, MSW or MBA) 153 7.3 Professional degree (e.g.: MD, DDS or JD) 34 1.6 Doctorate degree (e.g.: PhD, EdD) 26 1.2

Table III Income

Income Frequency (%)

Less than $10,000 198 9.5 $10,000-19,999 162 7.8 $20,000-29,999 281 13.5 $30,000-39,999 292 14.0 $40,000-49,999 208 10.0 $50,000-59,999 220 10.6 $60,000-69,999 137 6.6 $70,000-79,999 148 7.1 $80,000-89,999 84 4.0 $90,000-99,999 85 4.1 $100,000-149,999 162 7.8 $150,000 or more 59 2.8 No response 47 2.3

Understanding ethical consumers

Kendall Cox Park

Journal of Consumer Marketing

Volume 35 · Number 2 · 2018 · 157–168

161

significant relationship with consumption, especially ethical consumption (Brenton, 2013; Hudson et al. 2013). These involvement variables are only mildly correlated, and there are no signs of multicollinearity (see Appendix 2)[2]. After running balance checks to ensure that the randomization worked appropriately[3], I subsetted by treatment and ran regressions of price on all independent variables for each treatment group.

Results

At the most basic level, we find that stories matter. There is a significant difference in the price people report they will pay for the same socks when they are associated with different narratives (see Table V). The Fair Trade narrative is the most valuable, followed by Donate, BOGO, USA, Green and Control, in that order. T-tests indicate that each narrative is significantly more valuable than the control (no narrative), which supports H1. Additionally, the Fair Trade and Donate narratives are valued significantly more highly than the BOGO, Green and USA narratives. This supports H1a that people prefer narratives associated with human welfare. Table VIII displays the means and standard deviations for each treatment group. At the same time, this study suggests that people are sensitive

to reference points. We used a $4 anchor point in all conditions, including control. Unsurprisingly, $4 was the median price for four of the treatments (Green, USA, BOGO and Donate) and the mode for five of them (all but control). Many people likely selected $4 because they read it only seconds before; it was primed and available in their short-term memory. Nonetheless, the median price for all conditions was at least twice as large as the control median and significantly higher than the control mean. People were not willing to pay the anchor price for normal (control) socks, but they would pay it for ethical socks.

This indicates that most of our respondents found the $4 anchor too high a price for plain socks. On the other hand, it seemed a reasonable price for products associated with a cause or moral narrative. In this sense, people do report a willingness to pay a premium for ethical products. The most obvious finding is that being male decreases the

amount one will pay overall but especially for Green narratives, as we can see in Table II. T-tests on the full sample indicate that women pay more than men overall at p <.05. This is true regardless of whether we include the control treatment, but the difference between men and women is not significant for the control group alone. This supports H2, that ethical goods are worth more to women than men, but individual regressions (Table VI) indicate that the gender difference is only statistically significant for green goods. Holding everything else constant, a woman would be willing to spend 53 cents more for a green pair of socks than a man. H2 holds for green goods, but not for other ethical products[4]. We find that Democrats are willing to pay more than Republicans for ethical products[5], although the means for the Donate narrative are quite similar (Table VII). When we run individual regressions for each treatment (Table VIII), we find that Republicans spend 84 cents and 64 cents less than Democrats for Fair Trade and Green products, respectively. This offers some support for H3, at least for fair trade and green narratives. We can reject H3 for control, USA, BOGO and donate narratives. When we subset by treatment and run multiple regressions,

we get a better picture of who values each narrative (Table VIII). Fair Trade products appeal to a specific group. Younger people say they are willing to pay more for fair trade goods than their older counterparts. Democrats report significantly higher prices than Republicans and Independents. Those who donate to political campaigns report higher prices than non-donors, while those who do not sign petitions say they will pay more than those who do. Green goods attract a different group: women, highly

educated people, younger people and those who sign petitions report higher prices for green goods. The USA narrative is

Table IV Respondents’ age

Age in years Frequency (%)

18-20 135 6.5 21-25 548 26.3 26-30 531 25.5 31-35 350 16.8 36-40 168 8.1 41-45 108 5.2 46-50 70 3.4 51-55 71 3.4 56-60 48 2.3 61-65 23 1.1 66-70 6 0.3 701 5 0.2 No answer 20 1.0

Table V Mean price and standard deviation by treatment group

Condition Control FT Green USA BOGO Donate

Mean 2.47 4.30 3.75 3.80 3.88 4.07 SD 1.40 1.86 1.69 1.75 1.81 1.81

Table VI Average price by gender and treatment

Treatment group Men Women

Control $2.43 $2.57 FT $4.38 $4.41 Green $3.56 $4.08 USA $3.85 $3.71 Donate $4.04 $4.12 BOGO $3.71 $4.12

Table VII Average price by political party and treatment

Republican Democrat

Control $2.27 $2.57 FT $3.80 $4.67 Green $3.26 $3.99 USA $3.83 $4.01 Donate $4.20 $4.19 BOGO $3.63 $4.23

Understanding ethical consumers

Kendall Cox Park

Journal of Consumer Marketing

Volume 35 · Number 2 · 2018 · 157–168

162

more valued by wealthier respondents and those in “Other” political parties and is less valued by those who volunteer for a charity. Surprisingly, there were no significant effects for any of the demographic or involvement variables for the BOGO or Donate narratives. These two conditions have high intercept values and low coefficients, indicating that they tend to be valued by to all sorts of people, not just a particular group. Age has a significant negative effect on price for Fair Trade

and Green narratives, which at least partially supports H4. With each additional year of age, reported price for fair trade and green socks decreases by two cents. Or put another way, a 50- year-old shopper would pay 60 cents more for a green pair of socks than a 20-year-old shopper, all else being equal. Under H4, we expected that young people would also value the BOGO socks more highly than older people, but there was no effect whatsoever for this narrative. Education is only significantly associated with price for the

green narrative. With each additional year of education, respondents are willing to pay 10 cents more. Holding all other variables constant, a college graduate would pay 39 cents more for the same pair of sustainable socks than a high school graduate, and an medical doctor would pay 78 cents more. H5, that those with high levels of education will be willing to spend more for ethical goods, was only supported for green products. Similarly, income is only positively associated with price for one narrative: Made in the USA. Those with higher incomes say they are willing to pay more for socks made in America than those with lower incomes. H6 does not hold for the control, Fair Trade, Green, Donate or BOGO treatment groups. Again, we find that the data partially support H7 and H8.

Only a few measures of activism were significant. Voting, volunteering for a political campaign, protesting, boycotting

and donating to a charity had no impact on price for any of our narratives. Donating to a political campaign, petitioning and volunteering for a charity had a statistically significant impact, but only for certain narratives. Those who donate to political campaigns say they will pay less for fair trade goods than those who do not. People who petition are willing to pay more for fair trade and green goods than those who do not. Finally, people who volunteer for a charity say they will pay less for socks made in the USA than non-volunteers.

Discussion

Theoretical implications This article examines whether ethical narratives shape people’s valuations of consumer products, whether different groups value certain narratives more highly than others and whether political and civic engagement influence the price people pay for ethical goods. We find that there are differences in what people will pay for the same product when it is associated with a different ethical cause. There is not one sort of ethical shopper, but many. This study helps us make sense of divergent findings in the literature. Some report that gender impacts ethical shopping (Hudson et al., 2013; Taylor and Boasson, 2014; Elliott, 2013; Ross et al., 1992; Moosmayer and Fuljahn 2010), while others argue that it has no effect (Pedrini and Ferri, 2014; Youn and Kim, 2008). This study demonstrates that women are willing to pay more than men for green goods, but there is no significant difference for any other narratives. Both common sense and previous research suggest that

richer people spend more on ethical goods, which are often considered luxury items (Taylor and Boasson, 2014; Pedrini and Ferri, 2014), but not all narratives appeal to the wealthy. I

Table VIII Multiple regression coefficients and standard errors for each treatment

Coefficient FT Green USA BOGO Donate Control

Intercept 3.34* (1.41) 2.44 (1.30) 1.50 (1.29) 5.61*** (1.39) 5.05** (1.46) 2.99* (1.12) Male �0.08 (0.22) �0.53** (0.19) 0.09 (0.21) �0.27 (0.21) �0.06 (0.22) �0.15 (0.16) Age �0.02 (0.01) �0.02* (0.01) 0.00 (0.01) 0.00 (0.01) �0.01 (0.01) �0.00 (0.01) Asian �0.06 (0.35) 0.25 (0.31) �0.20 (0.34) �0.28 (0.34) �0.29 (0.39) 0.04 (0.25) Black 0.36 (0.43) �0.52 (0.46) �0.95* (0.42) 0.35 (0.40) �0.34 (0.55) �0.08 (0.32) Hispanic �0.25 (0.55) �0.30 (0.44) 0.19 (0.44) 0.12 (0.47) �0.60 (0.47) �0.11 (0.56) Other Race 0.15 (0.73) �2.05 (1.65) �0.09 (0.92) 0.17 (1.08) �0.79 (1.33) 0.24 (0.55) Log (income) 0.08 (0.12) 0.03 (0.10) 0.25* (0.12) �0.16 (0.12) �0.03 (0.12) 0.02 (0.09) Education 0.03 (0.05) 0.10* (0.05) �0.02 (0.05) 0.02 (0.06) �0.04 (0.05) �0.01 (0.04) Republican �0.84** (0.30) �0.63* (0.28) �0.26 (0.29) �0.46 (0.30) 0.00 (0.33) �0.32 (0.25) Independent �0.52* (0.24) �0.04 (0.22) �0.26 (0.23) �0.46 (0.30) 0.00 (0.33) �0.32 (0.25) Other Political Party �0.56 (0.39) �0.36 (0.30) �0.87** (0.33) �0.71 (0.37) �0.56 (0.35) �0.26 (0.28) Voted pres 0.30 (0.28) 0.36 (0.25) 0.29 (0.27) �0.27 (0.27) 0.30 (0.30) �0.19 (0.20) Voted S/L 0.12 (0.28 �0.08 (0.24) �0.10 (0.26) 0.37 (0.25) 0.08 (0.28) 0.04 (0.19) Political Volunteer 0.16 (0.56) �0.34 (0.48) 0.18 (0.48) �0.58 (0.69) �0.06 (0.59) �0.31 (0.50) Political donate �0.91* (0.40) 0.14 (0.43) 0.14 (0.41) 0.52 (0.47) �0.02 (0.38) 0.18 (0.32) Petition 0.43 (0.23) 0.55** (0.20) 0.11 (0.21) 0.23 (0.21) 0.26 (0.23) �0.24 (0.16) Protest 0.69 (0.42) 0.14 (0.37) �0.13 (0.46) 0.58 (0.45) �0.38 (0.39) 0.53 (0.42) Boycott �0.00 (0.32) �0.02 (0.31) �0.20 (0.31) �0.02 (0.45) 0.06 (0.36) 0.00 (0.32) Charity donate 0.19 (0.23) 0.11 (0.20) 0.05 (0.22) 0.11 (0.21) 0.33 (0.22) �0.19 (0.17) Charity Volunteer �0.11 (0.23) 0.31 (0.21) �0.41* (0.22) �0.12 (0.23) 0.03 (0.24) 0.04 (0.19) F-statistic (p-value) 1.73 (0.03) 2.50 (0.00) 1.20 (0.25) 1.21 (0.25) 0.87 (0.63) 0.52 (0.96)

Notes: *Statistical significance at P <= 0.05; **statistical significance at P <= 0.01; ***statistical significance at P <= 0.001

Understanding ethical consumers

Kendall Cox Park

Journal of Consumer Marketing

Volume 35 · Number 2 · 2018 · 157–168

163

found that people with higher incomes are willing to pay more for goods made in the USA, but there was no effect for other treatment groups. Research suggests that the highly educated are more likely to purchase ethical goods (Pedrini and Ferri, 2014). In this study, highly educated people report they will pay more for green goods, but education is unrelated to price for all other types of narratives. In short, there is no universal relationship between gender, income or education and ethical shopping. These findings highlight the importance of including many types of ethical consumption in our research. This paper provides a more comprehensive analysis of ethical consumption than past research, one that parses out several different narratives. Ethical consumption blends politics, altruism and the

market. It follows that political activism, charitable involvement and political orientation would be linked to people’s affinity for ethical goods. In reality, only a few activism measures had an effect: donating to a political campaign, petitioning and volunteering for a charity. Political donors say they will pay less for fair trade socks. People who sign petitions report a willingness to pay higher prices for fair trade and green narratives. Finally, charity volunteers value products made in the USA less than those who do not volunteer. Just as striking are the variables that do not significantly affect

the value of any ethical goods. We might imagine that the types of people, who protest, boycott and volunteer for political campaigns, would value ethical goods more highly. These people seek to affect change in the political realm; they dedicate their time to causes they care about. And yet, this study demonstrates that they are not willing to pay a higher price for ethical goods, products that affect change through the marketplace. Nor do people who donate money to a charity value charitable goods more highly. They are willing to give money to a cause they deem worthy, but they won’t pay more for goods attached to a cause – not even for the donate narrative. Perhaps ethical consumption appeals to those who want to

make a difference but don’t want to spend too much time or energy doing it. Perhaps the most involved people, those who protest and boycott, wouldn’t buy products to benefit a cause. Maybe they prefer to donate time and money instead. Maybe for them, socks aren’t a viable solution for solving major problems such as environmental degradation or child poverty. Of course, this is entirely speculation. Further research is needed to flesh out the full profile of ethical shoppers. Is this form of consumption a substitute for real political involvement? This question remains to be answered.

Practical implications Fair trade, green and American-made products attract distinct groups of buyers, but the two charitable narratives – BOGO and Donate – seem universally popular. BOGO products burst on the scene with the introduction of TOMS Shoes in 2007. Since then, Warby Parker glasses, Soapbox soaps, 2 Degrees granola bars, Smile Squared toothbrushes, BOGO Bowls pet foods and even the blatant copycat BOB’S Shoes have shared TOMS’ success. Although these products are typically marketed toward younger people, this study shows that they seem to appeal to a more general audience. Products with a donate narrative, such as bracelets for Susan J. Komen for the

Cure or Feed Bags that provide school meals for children, are sold online, in boutiques, and even in Target. Our results show that products whose proceeds go toward child health are popular among all groups. Indeed, this narrative was the second most highly valued overall. Practically, this study examines what sorts of stories appeal to

particular demographics. The results can help socially and environmentally responsible companies better understand their target customer. By knowing which narratives appeal to which demographic groups, marketers will be able to create more effective messages. For example, a women’s fashion line made in the USA may be more successful if it is marketed as “ethically sourced” or “made under good working conditions” than as “Made in the USA”. The reverse would be true for a men’s fashion line. The design of this study allows us to examine the value of different messages and to understand how that value varies by consumer characteristics.

Limitations and future research Of course, this study does not report what people actually buy – or even what they would buy if they were in a real market. Instead, it measures the value people place on different moral causes or narratives. Survey experiments pose the threat of social desirability bias, whereby subjects answer in ways that make them look good or that will please the researcher. Because subjects have no contact with the researcher and remain completely anonymous, social desirability is unlikely to affect the results. At the same time, it is always possible that subjects realize the goal of the survey and craft their responses accordingly. Furthermore, although Mechanical Turk tends to yield high-quality survey results, my sample was far from representative. There were more women, young people, Democrats and highly educated respondents than in the US population at large. This study includes only American subjects, and results may be different for different countries. Finally, socks are simply one among billions of consumer objects available to shoppers. Perhaps socks are unique in some unforeseen way. Further studies focusing on a different product would improve our understanding of how ethical narratives impact value. Furthermore, there are likely many factors driving ethical consumption, and ethical products may differentially appeal to people with characteristics we failed to measure. Nonetheless, this paper uncovers the complexity of ethical

consumption. The experimental design enables us to examine the independent effect of ethical narratives on consumers’ valuations. By parsing out fair trade, green, American-made, charity partnerships and BOGO, we can see that ethical consumption is a collection of distinct consumer movements. Products that explicitly donate to a charitable cause (Donate and BOGO) are universally appealing, whereas others, such as green and fair trade, appeal to a specific demographic. Further studies should focus on the actual purchasing behavior of consumers. Are the same consumers buying multiple types of ethical consumption? For which types of products do people tend to buy ethically? Food? Household items? Clothing? This paper begins to flesh out a typology of ethical narratives, but it also highlights the need for a more comprehensive analysis of ethical consumption.

Understanding ethical consumers

Kendall Cox Park

Journal of Consumer Marketing

Volume 35 · Number 2 · 2018 · 157–168

164

Notes

1 See Appendix 1 for a sample question.

2 I also tried to create an index using principal component analysis (PCA). The few groupings PCA produced did not make much sense logically, and these index variables did not reach significance in any analysis. It seems that each of these aspects of involvement are actually different things.

3 I also tested the assumption of normality and model fit. See Appendix 3 for more information.

4 t-Tests suggest that women pay more for men at a = 0.05 for all conditions, but in controlled individual regressions, gender is only significant for green narratives.

5 t-Tests indicate that Democrats pay more than Republicans overall, at a = 0.05.

References

Aalto-Setala, V. and Raijas, A. (2003), “Actual market prices and consumer price knowledge”, Journal of Product & Brand Management, Vol. 12 No. 3, pp. 180-192.

Anderson, R.C. and Hansen, E.N. (2004), “Determining consumer preferences for ecolabeled forest products: an experimental approach”, Journal of Forestry, Vol. 102 No. 4, pp. 28-32.

Beckert, J. (2011), “Where do prices come from? Sociological approaches to price formation”, Socio-Economic Review, Vol. 9 No. 4, pp. 757-786.

Brenton, S. (2013), “The political motivations of ethical consumers”, International Journal of Consumer Studies, Vol. 37 No. 5, pp. 290-297.

Cone Communications. (2010), “Cone cause evolution study”, available at www.conecomm.com/2010-cone-cause- evolution-study (accessed 10 November 2014).

Cone/Echo (2011), “Cone/Echo global CR opportunity study”, Cone Communications, available at: www. conecomm.com/research-blog/2011-cone-echo-global-cr- opportunity-study (accessed 12 January 2017).

Elliott, R. (2013), “The taste for green: the possibilities and dynamics of status differentiation through ‘green’ consumption”, Poetics, Vol. 41 No. 3, pp. 294-322.

Fourcade, M. and Healy, K. (2007), “Moral views of market society”, Annual Review of Sociology, Vol. 33 No. 1, pp. 285-311.

Horton, J., Rand, D. and Zeckhauser, R. (2011), “The online laboratory: conducting experiments in a real labor market”, Experimental Economics, Vol. 14 No. 3, pp. 399-425.

Hudson, M., Hudson, I. and Edgerton, J.D. (2013), “Political consumerism in context: an experiment on status and information in ethical consumption decisions”, American Journal of Economics and Sociology, Vol. 72 No. 4, pp. 1008-1037.

Jekanowski, M.D., Williams, D.R. and Schnick, W.A. (2000), “Consumers’ willingness to purchase locally produced agricultural products: an analysis of an Indiana survey”, Agricultural and Resource Economics Review, Vol. 29 No. 1, pp. 43-53.

Jensen, B.B. and Grunert, K.G. (2014), “Price knowledge during grocery shopping: what we learn and what we forget”, Journal of Retailing, Vol. 90 No. 3, pp. 332-346.

Kimeldorf, H., Meyer, R., Prasad, M. and Robinson, I. (2006), “Consumers with a conscience: will they pay more?”, Contexts, Vol. 5 No. 1, pp. 24-29.

McEachern, M.G., Warnaby, G., Carrigan, M. and Szmigin, I. (2010), “Thinking locally, acting locally? conscious consumers and farmers markets”, Journal of Marketing Management, Vol. 26 Nos 5/6, pp. 395-412.

Maniates, M.F. (2001), “Individualization: plant a tree, buy a bike, save the world?”, Global Environmental Politics, Vol. 1 No. 3, pp. 31-52.

Marquis, C. and Park, A. (2014), “Inside the buy-one-give-one model”, Stanford Social Innovation Review, Vol. 12 No. 1, pp. 28-33.

Mason, W. and Suri, S. (2012), “Conducting behavioral research on amazon’s mechanical Turk”, Behavior research methods, Vol. 44 No. 1, pp. 1-23.

Monroe, K.B. and Lee, A.Y. (1999), “Remember versus knowing: issues in buyers’ processing of price information”, Journal of the Academy of Marketing Science, Vol. 27 No. 2, pp. 207-225.

Moosmayer, D.C. and Fuljahn, A. (2010), “Consumer perceptions of cause related marketing campaigns”, Journal of Consumer Marketing, Vol. 27 No. 6, pp. 543-549.

Mutz, D.C. (2011), Population-Based Survey Experiments, Princeton University Press, Princeton, NJ.

Paolacci, G., Chandler, J. and Ipeirotis, P. (2010), “Running experiments on Amazon Mechanical Turk”, Judgment and Decision Making, Vol. 5 No. 5, pp. 411-419.

Pedrini, M. and Ferri, L.M. (2014), “Socio-demographical antecedents of responsible consumerism propensity”, International Journal of Consumer Studies, Vol. 38 No. 2, pp. 127-138.

Quinn, S. (2008), “The transformation of morals in markets: death, benefits, and the exchange of life insurance policies”, American Journal of Sociology, Vol. 114 No. 3, pp. 738-780.

Rode, J., Hogarth, R.M. and Le Menestrel, M. (2008), “Ethical differentiation and market behavior: an experimental approach”, Journal of Economic Behavior & Organization, Vol. 66 No. 2, pp. 265-280.

Ross, J.K., Patterson, L.T. and Stutts, M. (1992), “Consumer perceptions of organizations that use cause-related marketing”, Journal of the Academy of Marketing Science, Vol. 20 No. 1, pp. 93-97.

Rozensher, S. (2013), “The growth of cause marketing: past, current, and future trends”, Journal of Business & Economics Research, Vol. 11 No. 4, pp. 181-186.

Sassatelli, R. (2006), “Virtue, responsibility and consumer choice: framing critical consumerism”, Brewer, J. and Trentmann, F. (Eds), Consuming Cultures, Global Perspectives, Berg, New York, NY, pp. 219-250.

Shamir, R. (2008), “The age of responsibilization: on market embedded morality”, Economy and Society, Vol. 37 No. 1, pp. 1-19.

Taylor, J. and Boasson, V. (2014), “Who buys fair trade and why (or why not)? A random survey of households”, Journal of Consumer Affairs, Vol. 48 No. 2, pp. 418-430.

Understanding ethical consumers

Kendall Cox Park

Journal of Consumer Marketing

Volume 35 · Number 2 · 2018 · 157–168

165

http://www.conecomm.com/2010-cone-cause-evolution-study

http://www.conecomm.com/research-blog/2011-cone-echo-global-cr-opportunity-study

Thompson, C.J. and Coskuner-Balli, G. (2007), “Enchanting ethical consumerism: the case of community supported agriculture”, Journal of Consumer Culture, Vol. 7 No. 3, pp. 275-303.

Vanhuele, M. and Drèze, X. (2002), “Measuring the price knowledge shoppers bring to the store”, Journal of Marketing, Vol. 66 No. 4, pp. 72-85.

Youn, S. and Kim, H. (2008), “Antecedents of consumer attitudes toward cause-related marketing”, Journal of Advertising Research, Vol. 48 No. 1, pp. 123-137.

Zelizer, V.A. (2010), Economic Lives: How Culture Shapes the Economy, Princeton University Press, Princeton, NJ.

Zepeda, L. and Li, J. (2006), “Who buys local food?”, Journal of Food Distribution Research, Vol 37, p. 385-394.

Zepeda, L. and Nie, C. (2012), “What are the odds of being an organic or local food shopper? Multivariate analysis of US food shopper lifestyle segments”, Agriculture and Human Values, Vol. 29 No. 4, pp. 467-480.